Boeing shares tank following another Dreamliner mishap
Japanese carriers, big Boeing customers, ground their 787 fleets.
A 787 operated by All Nippon Airways was forced to make an emergency landing in Japan after a smoke alarm went off apparently because of a fire in a battery, according to media reports. Nippon Airways and Japan Airlines, Japan's largest airlines, have grounded their Dreamliner fleets as a result. Together, the two airlines have purchased 24 of the 50 Dreamliners Boeing has made since it began delivering the aircraft in November 2011.
Shares of the aerospace company fell $2.32, or 3%, to $74.62. The shares are little changed over the past year.
The problems in Japan come on the heels of the U.S. government's review of the manufacturing and design of the Dreamliner. According to The Wall Street Journal, the Chicago-based company was not too keen on the review, "arguing it was unwarranted and threatened to undermine investor, customer and passenger confidence in the plane" The FAA didn't order the aircraft to be grounded while the review was done. Indeed, United Airlines, which operates six Dreamliners, continues to have confidence in the aircraft, the paper says.
The Chicago-based company delayed releasing the state-of-the-art aircraft for nearly four years as the firm was forced to address unexpected defects. Boeing has said the 787 can fly passengers farther at a lower cost because it is far more fuel-efficient than more conventional aircraft. Some carriers may be holding off buying the aircraft until they can be assured that the technical glitches are going to come to an end. The importance of the Dreamliner to Boeing cannot be underestimated.
"I suspect many carriers are getting a bit nervous, particularly if they're expecting an early production aircraft," writes Richard Aboulafia, of the Teal Group, an aviation consultancy, in an email to MSN. "Boeing built scores of 787s before the plane was put into service, which means many planes were built in different ways and heavily modified. It also means that many production aircraft didn't benefit from experience learned as the plane entered revenue service. All of this is a recipe for trouble."
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.
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[BRIEFING.COM] Equities ended on their lows with the S&P 500 down 1.4%.
The S&P entered today's session with a week-to-date gain of 1.5% as investors expected reassuring words from today's Federal Open Market Committee Statement.
Stocks traded with slim losses until this afternoon's FOMC Statement and subsequent comments from Chairman Bernanke sent equities and Treasuries to their lows while also providing a significant boost to the dollar.
Today's Statement was ... More
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